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    The Debt Ceiling Debate Is About More Than Debt

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    Republicans’ opening bid to avert economic catastrophe by raising the nation’s borrowing limit focuses more on energy policy than reducing debt.WASHINGTON — Speaker Kevin McCarthy of California has repeatedly said that he and his fellow House Republicans are refusing to raise the nation’s borrowing limit, and risking economic catastrophe, to force a reckoning on America’s $31 trillion national debt.“Without exaggeration, America’s debt is a ticking time bomb that will detonate unless we take serious, responsible action,” he said this week.But the bill Mr. McCarthy introduced on Wednesday would only modestly change the nation’s debt trajectory. It also carries a second big objective that has little to do with debt: undercutting President Biden’s climate and clean energy agenda and increasing American production of fossil fuels.The legislation, which Republicans plan to vote on next week, is meant to force Mr. Biden to negotiate over raising the debt limit, which is currently capped at $31.4 trillion. Unless the cap is lifted, the federal government — which borrows huge sums of money to pay its bills — is expected to run out of cash as early as June. The House Rules Committee said on Friday that it will meet on Tuesday to consider the bill and possibly advance it to a floor vote.More than half the 320 pages of legislative text are a rehash of an energy bill that Republicans passed this year and that aimed to speed up leasing and permitting for oil and gas drilling. Republicans claim the bill would boost economic growth and bring in more revenue for the federal government, though the Congressional Budget Office projected it would slightly lose revenue.The Republican plan also gives priority to removing clean energy incentives that were included in Mr. Biden’s signature climate, health and tax law. That legislation, known as the Inflation Reduction Act, included tax credits and other provisions meant to encourage electric vehicle sales, advanced battery production, utility upgrades and a variety of energy efficiency efforts.The proposal does include provisions that would meaningfully reduce government spending and deficits, most notably by limiting total growth in certain types of federal spending from 2022 levels.The bill would claw back some unspent Covid relief money and impose new work requirements that could reduce federal spending on Medicaid and food assistance. It would block Mr. Biden’s proposal to forgive hundreds of billions of dollars in student loan debt and a related plan to reduce loan payments for low-income college graduates.As a result, it would reduce deficits by as much as $4.5 trillion over those 10 years, according to calculations by the Committee for a Responsible Federal Budget in Washington. The actual number could be much smaller; lawmakers could vote in the future to ignore spending caps, as they have in the past.Even if the entire estimated savings from the plan came to pass, it would still leave the nation a decade from now with total debt that was larger than the annual output of the economy — a level that Mr. McCarthy and other Republicans have frequently labeled a crisis.The Republican plan is estimated to reduce that ratio — known as debt-to-G.D.P. — in 2033 by about nine percentage points if fully enacted. By contrast, Mr. Biden’s latest budget, which raises trillions of dollars in new taxes from corporations and high earners and includes new spending on child care and education, would reduce the ratio by about six percentage points.Those reductions are a far cry from Republicans’ promises, after they won control of the House in November, to balance the budget in 10 years. That lowering of ambitions is partly the product of Republican leaders’ ruling out any cuts to the fast-rising costs of Social Security or Medicare, bowing to an onslaught of political attacks from Mr. Biden.The lower ambitions are also the result of party leaders’ unwillingness or inability to repeal most of the new spending programs Mr. Biden signed into law over the first two years of his presidency, often with bipartisan support.At the New York Stock Exchange on Monday, Mr. McCarthy accused the president and his party of already adding “$6 trillion to our nation’s debt burden,” ignoring the bipartisan support enjoyed by most of the spending Mr. Biden has signed into law.The speaker’s plan would effectively roll back one big bipartisan spending bill, which Mr. Biden signed at the end of 2022 to fund the government through this year. But the other big drivers of debt approved under Mr. Biden that are not singled out for repeal in the Republican bill include trillions in new spending on semiconductor manufacturing, health care for veterans exposed to toxic burn pits, and upgrades to critical infrastructure like bridges, water pipes and broadband.Some of that spending could potentially be reduced by congressional appropriators working under the proposed spending caps, but much of it is exempt from the cap or already out the door. Most of the $1.9 trillion economic aid plan Mr. Biden signed in March 2021, which Republicans blame for fueling high inflation, is already spent as well.The plan squarely targets the climate, health and tax bill that Democrats passed along party lines last summer by cutting that bill’s energy subsidies. It would also rescind additional enforcement dollars that the law sent to the Internal Revenue Service to crack down on wealthy tax cheats. The Congressional Budget Office says that change would cost the government about $100 billion in tax revenue.Taken together, those efforts reduce deficits by a bit over $100 billion, suggesting debt levels are not the primary consideration in targeting those provisions. The bill’s next 200 pages show what actually is: a sustained push to tilt federal support away from low-emission energy and further toward fossil fuels, including mandating new oil and gas leasing on federal lands and reducing barriers to the construction of new pipelines.Republicans say those efforts would save consumers money by reducing gasoline and heating costs. Democrats say they would halt progress on Mr. Biden’s efforts to galvanize domestic manufacturing growth and fight climate change.The plan “would cost Americans trillions in climate harm,” said Senator Sheldon Whitehouse of Rhode Island, the Democratic chairman of the Budget Committee. “And it would shrink our economy by disinvesting in the technologies of tomorrow.”Republicans have positioned their fossil fuel efforts as a solution to a supposed production crisis in the United States. “I have spent the last two years working with the other side of the aisle, watching them systematically take this country apart when it comes to our natural resources,” Representative Jerry Carl of Alabama said last month before voting to pass the energy bill now embedded in the debt ceiling bill.Government statistics show a rosier picture for the industry. Oil production in the United States has nearly returned to record highs under Mr. Biden. The Energy Department projects it will smash records next year, led by output increases from Texas and New Mexico. Natural gas production has never been higher.White House officials warn that Republicans are risking a catastrophic default with their demands attached to raising the borrowing cap. “The way to have a real negotiation on the budget is for House Republicans to take threats of default, when it comes to the economy and what it could potentially do to the economy, off the table,” Karine Jean-Pierre, the White House press secretary, told reporters on Thursday.Mr. McCarthy has defended his entire set of demands as a complete package to reorient economic policy. But he mentioned energy only in passing in his speech to Wall Street.The issue he called a crisis — and the basis he cited for refusing to raise the borrowing limit without conditions — was fiscal policy and debt. Debt limit negotiations, he said, “are an opportunity to examine our nation’s finances.” More

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    Climate Change May Bring New Era of Trade Wars, as E.U. and U.S. Spar

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    Countries are pursuing new solutions to try to mitigate climate change. More trade fights are likely to come hand in hand.WASHINGTON — Efforts to mitigate climate change are prompting countries across the world to embrace dramatically different policies toward industry and trade, bringing governments into conflict.These new clashes over climate policy are straining international alliances and the global trading system, hinting at a future in which policies aimed at staving off environmental catastrophe could also result in more frequent cross-border trade wars.In recent months, the United States and Europe have proposed or introduced subsidies, tariffs and other policies aimed at speeding the green energy transition. Proponents of the measures say governments must move aggressively to expand sources of cleaner energy and penalize the biggest emitters of planet-warming gases if they hope to avert a global climate disaster.But critics say these policies often put foreign countries and companies at a disadvantage, as governments subsidize their own industries or charge new tariffs on foreign products. The policies depart from a decades-long status quo in trade, in which the United States and Europe often joined forces through the World Trade Organization to try to knock down trade barriers and encourage countries to treat one another’s products more equally to boost global commerce.Now, new policies are pitting close allies against one another and widening fractures in an already fragile system of global trade governance, as countries try to contend with the existential challenge of climate change.“The climate crisis requires economic transformation at a scale and speed humanity has never attempted in our 5,000 years of written history,” said Todd N. Tucker, the director of industrial policy and trade at the Roosevelt Institute, who is an advocate for some of the measures. “Unsurprisingly, a task of this magnitude will require a new policy tool kit.”The current system of global trade funnels tens of millions of shipping containers stuffed with couches, clothing and car parts from foreign factories to the United States each year, often at astonishingly low prices. But the prices that consumers pay for these goods do not take into account the environmental harm generated by the far-off factories that make them, or by the container ships and cargo planes that carry them across the ocean.A factory in Chengde, China. U.S. officials believe they must lessen a dangerous dependence on goods from China.Fred Dufour/Agence France-Presse — Getty ImagesAmerican and European officials argue that more needs to be done to discourage trade in products made with more pollution or carbon emissions. And U.S. officials believe they must lessen a dangerous dependence on China in particular for the materials needed to power the green energy transition, like solar panels and electric vehicle batteries.The Biden administration is putting in place generous subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars and companies building new plants for solar and wind power equipment. Both the United States and Europe are introducing taxes and tariffs aimed at encouraging less environmentally harmful ways of producing goods.Biden administration officials have expressed hopes that the climate transition could be a new opportunity for cooperation with allies. But so far, their initiatives seem to have mainly stirred controversy when the United States is already under attack for its response to recent trade rulings.The administration has publicly flouted several decisions of World Trade Organization panels that ruled against the United States in trade disputes involving national security issues. In two separate announcements in December, the Office of the United States Trade Representative said it would not change its policies to abide by W.T.O. decisions.But the biggest source of contention has been new tax credits for clean energy equipment and vehicles made in North America that were part of a sweeping climate and health policy bill that President Biden signed into law last year. European officials have called the measure a “job killer” and expressed fears they will lose out to the United States on new investments in batteries, green hydrogen, steel and other industries. In response, European Union officials began outlining their own plan this month to subsidize green energy industries — a move that critics fear will plunge the world into a costly and inefficient “subsidy war.”The United States and European Union have been searching for changes that could be made to mollify both sides before the U.S. tax-credit rules are settled in March. But the Biden administration appears to have only limited ability to change some of the law’s provisions. Members of Congress say they intentionally worded the law to benefit American manufacturing.Biden administration is putting in place subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars.Brittany Greeson for The New York TimesEuropean officials have suggested that they could bring a trade case at the World Trade Organization that might be a prelude to imposing tariffs on American products in retaliation.Valdis Dombrovskis, the European commissioner for trade, said that the European Union was committed to finding solutions but that negotiations needed to make progress or the European Union would face “even stronger calls” to respond.“We need to follow the same rules of the game,” he said.Anne Krueger, a former official at the International Monetary Fund and World Bank, said the potential pain of American subsidies on Japan, South Korea and allies in Europe was “enormous.”“When you discriminate in favor of American companies and against the rest of the world, you’re hurting yourself and hurting others at the same time,” said Ms. Krueger, now a senior fellow at the School of Advanced International Studies at Johns Hopkins University.But in a letter last week, a collection of prominent labor unions and environmental groups urged Mr. Biden to move forward with the plans without delays, saying outdated trade rules should not be used to undermine support for a new clean energy economy.“It’s time to end this circular firing squad where countries threaten and, if successful, weaken or repeal one another’s climate measures through trade and investment agreements,” said Melinda St. Louis, the director of the Global Trade Watch for Public Citizen, one of the groups behind the letter.Valdis Dombrovskis, the European commissioner for trade, has pressed the United States to negotiate more on its climate-related subsidies for American manufacturing.Stephanie Lecocq/EPA, via ShutterstockOther recent climate policies have also spurred controversy. In mid-December, the European Union took a major step toward a new climate-focused trade policy as it reached a preliminary agreement to impose a new carbon tariff on certain imports. The so-called carbon border adjustment mechanism would apply to products from all countries that failed to take strict actions to cut their greenhouse gas emissions.The move is aimed at ensuring that European companies that must follow strict environmental regulations are not put at a disadvantage to competitors in countries where laxer environmental rules allow companies to produce and sell goods more cheaply. While European officials argue that their policy complies with global trade rules in a way that U.S. clean energy subsidies do not, it has still rankled countries like China and Turkey.The Biden administration has also been trying to create an international group that would impose tariffs on steel and aluminum from countries with laxer environmental policies. In December, it sent the European Union a brief initial proposal for such a trade arrangement.The idea still has a long way to go to be realized. But even as it would break new ground in addressing climate change, the approach may also end up aggravating allies like Canada, Mexico, Brazil and South Korea, which together provided more than half of America’s foreign steel last year.Under the initial proposal, these countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs on their products.A steel plant in Belgium. Under the initial proposal, countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs.Kevin Faingnaert for The New York TimesProponents of new climate-focused trade measures say discriminating against foreign products, and goods made with greater carbon emissions, is exactly what governments need to build up clean energy industries and address climate change.“You really do need to rethink some of the fundamentals of the system,” said Ilana Solomon, an independent trade consultant who previously worked with the Sierra Club.Ms. Solomon and others have proposed a “climate peace clause,” under which governments would commit to refrain from using the World Trade Organization and other trade agreements to challenge one another’s climate policies for 10 years.“The complete legitimacy of the global trading system has never been more in question,” she said.In the United States, support appears to be growing among both Republicans and Democrats for more nationalist policies that would encourage domestic production and discourage imports of dirtier goods — but that would also most likely violate World Trade Organization rules.Most Republicans do not support the idea of a national price on carbon. But they have shown more willingness to raise tariffs on foreign products that are made in environmentally damaging ways, which they see as a way to protect American jobs from foreign competition.Robert E. Lighthizer, a chief trade negotiator for the Trump administration, said there was “great overlap” between Republicans and Democrats on the idea of using trade tools to discourage imports of polluting products from abroad.“I’m coming at it to get more American employed and with higher wages,” he said. “You shouldn’t be able to get an economic advantage over some guy working in Detroit, trying to support his family, from pollution, by manufacturing overseas.” More

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    Chinese Solar Makers Evaded U.S. Tariffs, Investigation Finds

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    The Biden administration pre-emptively halted any penalties from the case in June, prompting critics to say the administration had shortcut its own trade rulesWASHINGTON — U.S. officials have determined that four of eight major Chinese solar companies under investigation in recent months tried to evade tariffs by funneling products into the United States through Southeast Asian countries, in a trade case that has pitted clean energy advocates against domestic solar panel manufacturers.The decision applies to the Thailand operations of Canadian Solar and Trina Solar, as well as BYD Cambodia and Vina Solar Vietnam, according to documents published by the Department of Commerce Friday morning.The ruling centered around esoteric trade laws that aim to protect American manufacturers from unfairly cheap foreign products. But more broadly, the case is related to an increasingly difficult question confronting U.S. policymakers: how quickly the United States can expect to wean itself off China’s supply of materials that are crucial for the American economy, including the solar panels that are needed for a transition to green energy.The investigation, initiated at the request of a small California-based company named Auxin Solar, centered on whether Chinese companies have been trying to bypass tariffs that the United States imposed on cheap solar panels imported from China. In recent years, Chinese solar companies have significantly expanded their manufacturing presence in Southeast Asian countries that do not face the same tariffs.The trade case rests on whether the Chinese companies are actually using these Southeast Asian countries as a significant site of manufacturing, or if they are just making minor changes to products that are largely made in China to try to get around U.S. trade rules.Other companies that were also under investigation — namely New East Solar Cambodia, Hanwha Q CELLS Malaysia, Jinko Solar Malaysia and the Vietnam operations of Boviet Solar — were found not to be violating U.S. trade rules.Typically, companies that are found to be circumventing U.S. tariffs would immediately be subject to higher duty rates to bring their products into the United States. But in an unusual measure, the Biden administration in June pre-empted those higher duties by announcing a two-year pause on any tariff increases on solar products.The administration said its decision to halt additional tariffs would help ensure that the United States has enough solar panels as it tries to reduce its reliance on fossil fuels in the months to come. The Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.But domestic manufacturing groups have criticized the president’s decision to halt any imposition of tariffs, saying he is failing to enforce America’s trade rules and crack down on unfair Chinese practices.Solar importers, too, have expressed dissatisfaction with the decision, saying that the two-year pause is not enough time to establish sufficient manufacturing capacity outside China to meet rising U.S. demand.Enormous planned investments in solar energy have raised the stakes of the debate. The Inflation Reduction Act, a sweeping new climate law signed by President Biden in August, provides roughly $37 billion in incentives for companies to produce solar panels, wind turbines, batteries and other crucial minerals in the United States, aiming to reverse the longstanding migration of clean energy manufacturing to China and elsewhere.The clash is the latest chapter in a decade-long conflict between the United States and China over the solar industry. In 2012, the United States began imposing duties on Chinese solar panels, arguing that Chinese manufacturers were unfairly selling their products in the United States at prices below the cost of production. Chinese solar manufacturers shifted their operations to Taiwan instead, but the United States soon expanded its tariffs to apply to Taiwan, as well.In recent years, Chinese companies have set up new manufacturing operations in Southeast Asia, and exports of solar products to the United States from Vietnam, Malaysia, Thailand and Cambodia have exploded. In many cases, these factories appear to rely on raw materials sourced largely from China, like polysilicon.That business model has proved problematic in more ways than one. The U.S. government has found that major Chinese producers of polysilicon and solar products are guilty of using forced labor in the Xinjiang region of China and has banned any products using that polysilicon from the United States.Auxin Solar and other domestic manufacturers have also said that the boom in business in Southeast Asia was an attempt by Chinese companies to evade the duties that the United States had imposed on Chinese products.In a preliminary decision on the case on Friday, officials at the Commerce Department agreed, at least for some cases. The Commerce Department will now require solar companies exporting to the United States from Thailand, Malaysia, Vietnam and Cambodia to certify that a significant proportion of their materials are coming from outside China. Otherwise, companies in those countries will be subject to the same duties paid by their Chinese suppliers starting in 2024. The Commerce Department will continue to review the case and issue its final decision on the matter on May 1, 2023.Mamun Rashid, the chief executive of Auxin Solar, said in a statement that the findings “largely validated and confirmed Auxin’s allegations of Chinese cheating.”“We will continue to press forward in these cases as they continue to make sure all trade cheats are playing by the rules,” he said.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, which opposed the investigation, said the group was “obviously disappointed that commerce elected to exceed its legal authority” by ruling against the imports from Southeast Asia.“This decision will strand billions of dollars’ worth of American clean energy investments and result in the significant loss of good-paying, American, clean energy jobs,” she said, adding, “This is a mistake we will have to deal with for the next several years.”Major solar importers have complained for months of difficulties obtaining enough solar panels to meet growing demand for clean energy solutions. George Hershman, the chief executive of SOLV Energy, a large solar contracting firm that has provided engineering, construction and maintenance services for projects across 26 states, said the decision was likely to disrupt an industry that has already been reeling from supply chain constraints in recent years.“The upside is that commerce took a nuanced approach to exempt a number of manufacturers rather than issuing a blanket ban of all products from the targeted countries,” Mr. Hershman said. “While it’s positive that companies will be able to access some of the crucial materials we need to deploy clean energy, it’s still true that this ruling will further constrict a challenged supply chain.”Some members of the Biden administration are sympathetic to these arguments. In a hearing in May before the Senate Energy Committee, Jennifer M. Granholm, the secretary of energy, said the investigation put at stake “the complete smothering of the investment and the jobs and the independence that we would be seeking as a nation to get our fuel from our own generation sources.”The investigation was under the purview of the Department of Commerce, not the Department of Energy, she said. “But I am certainly deeply concerned about the goal of getting to 100 percent clean electricity by 2035 if this is not resolved quickly.”But the Biden administration’s decision to effectively neutralize the trade investigation by halting any additional tariffs that would result from it until June 2024 has also attracted its share of criticism.Along with the small group of solar manufacturers who do not have ties to China, groups that lobby in favor of domestic manufacturing have protested the Biden administration’s taking action in a type of trade decision that is typically independent and quasi-judicial.“This is illegal activity that is directly harming our companies. That’s why we have trade laws,” said Nick Iacovella, the communications director for the Coalition for a Prosperous America, which called Friday for the Biden administration to rescind its emergency declaration halting the tariffs. “There’s absolutely no reason we should allow the Chinese to continue illegal activity for two years.”In a letter to the Biden administration in July, Democratic lawmakers, including Daniel T. Kildee of Michigan, also criticized the decision to pause the tariffs, saying it would undercut “existing and planned domestic solar manufacturing investments, hurting American workers and companies.”Trade remedy laws are one of the only tools available to defend American manufacturers and “should not be undermined,” they wrote.But other lawmakers called on Friday for an extension of the two-year pause on tariffs. Eight Democratic senators, led by Jacky Rosen from Nevada, said solar projects needed access to more basic components to operate.The debate is taking on increasing urgency now that the United States is preparing to make huge investments in its clean energy industry, through bills such as the Inflation Reduction Act.Analysts say it will still take time for the United States to be independent of foreign solar imports. In 2021, the United States had the capacity to manufacture roughly 7.5 gigawatts’ worth of solar modules a year, according to industry figures.In the wake of the passage of the new climate law, several companies have announced plans to increase that capacity by another 20 gigawatts a year over the coming decade, according to ClearView Energy Partners, a Washington research firm.But solar companies are expected to install far more than that — nearly 40 gigawatts worth of solar capacity in 2023, according to government forecasts — spurred on by other tax breaks for solar power in the new climate law. And the country still lacks the capacity to produce solar cells and wafers, key components that are primarily produced overseas.“Therefore, domestic solar panel manufacturers appear likely to rely heavily on an overseas supply chain after” any tariffs are potentially put in place by the end of 2024 as a result of the Commerce Department’s decision, the analysts at ClearView concluded. More

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    Portugal Could Hold an Answer for a Europe Captive to Russian Gas

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    Portugal has no coal mines, oil wells or gas fields. Its impressive hydropower production has been crippled this year by drought. And its long-running disconnect from the rest of Europe’s energy network has earned the country its status as an “energy island.”Yet with Russia withholding natural gas from countries opposed to its invasion of Ukraine, the tiny coastal nation of Portugal is suddenly poised to play a critical role in managing Europe’s looming energy crisis.For years, the Iberian Peninsula was cut off from the web of pipelines and huge supply of cheap Russian gas that power much of Europe. And so Portugal and Spain were compelled to invest heavily in renewable sources of energy like wind, solar and hydropower, and to establish an elaborate system for importing gas from North and West Africa, the United States, and elsewhere.Now, access to these alternate energy sources has taken on new significance. The changed circumstances are shifting the power balances among the 27 members of the European Union, creating opportunities as well as political tensions as the bloc seeks to counter Russia’s energy blackmail, manage the transition to renewables and determine infrastructure investments.The Alto Tamega dam, part of a hydropower facility in northern Portugal that will be operational in 2024.Matilde Viegas for The New York TimesThe urgency of Europe’s task is on display this week. On Wednesday, Russia’s energy monopoly, Gazprom, again suspended already reduced gas deliveries to Germany through its Nord Stream 1 pipeline. With natural gas costing about 10 times what it did a year ago, the European Union has called for an emergency meeting of its energy ministers next week.As Brussels tries to figure out how to manage the crisis, the possibility of funneling more gas to Europe through Portugal and Spain is gaining attention.Portugal and Spain were among the first European nations to build the kind of processing terminals needed to accept boatloads of natural gas in liquefied form and to convert it back into the vapor that could be piped into homes and businesses.This imported liquefied natural gas, or L.N.G., was more expensive than the type much of Europe piped in from Russia. But now that Germany, Italy, Finland and other European nations are frantically seeking to replace Russian gas with substitutes shipped by sea from the United States, North Africa and the Middle East, this disadvantage is an advantage.Solar panels in Sintra. Connecting such panels to Europe’s electricity grid could help ease energy shortages on the continent.Matilde Viegas for The New York TimesTogether, Spain and Portugal account for one-third of Europe’s capacity to process L.N.G. Spain has the most terminals and the biggest, though Portugal has the most strategically located.Its terminal in Sines is the closest of any in Europe to the United States and the Panama Canal; it was the first port in Europe to receive L.N.G. from the United States, in 2016. Even before the war in Ukraine, Washington identified it as a strategically important gateway for energy imports to the rest of Europe.Spain also has an extensive network of pipelines that carry natural gas from Algeria and Nigeria, as well as large storage facilities.Understand the Decline in U.S. Gas PricesCard 1 of 5Understand the Decline in U.S. Gas PricesGas prices are falling. More

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    Analysis Deems Biden’s Climate and Tax Bill Fiscally Responsible

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    Despite Republican claims, the new legislation would be only a modest corporate tax increase, Congress’s Joint Committee on Taxation found.After more than a year of trying — and failing — to pack much of President Biden’s domestic agenda into a single tax-and-spend bill, Democrats appear to have finally found a winning combination. They’ve scrapped most of the president’s plans, dialed down the cost and focused on climate change, health care and a lower budget deficit.As soon as party leaders announced that new bill last week, Republicans began attacking it in familiar terms. They called it a giant tax increase and a foolish expansion of government spending, which they alleged would hurt an economy reeling from rapid inflation.But outside estimates suggest the bill would not cement a giant tax increase or result in profligate federal spending.An analysis by the Joint Committee on Taxation, a congressional nonpartisan scorekeeper for tax legislation, suggests that the bill would raise about $70 billion over 10 years. But the increase would be front-loaded: By 2027, the bill would actually amount to a net tax cut each year, as new credits and other incentives for low-emission energy sources outweighed a new minimum tax on some large corporations.That analysis, along with a broader estimate of the bill’s provisions from the nonpartisan Committee for a Responsible Federal Budget, suggests that the legislation, if passed, would only modestly add to federal spending over the next 10 years. By the end of the decade, the bill would be reducing federal spending, compared with what is scheduled to happen if it does not become law.And because the bill also includes measures to empower the Internal Revenue Service to crack down on corporations and high-earning individuals who evade taxes, it is projected to reduce the federal budget deficit over a decade by about $300 billion.Adding up the headline cost for what Democrats are calling the Inflation Reduction Act is more complicated than it was for many previous tax or spending measures that lawmakers approved. The bill blends tax increases and tax credits, just as Republicans did when they passed President Donald J. Trump’s signature tax package in 2017. But it also includes a spending increase meant to boost tax revenues and a spending cut meant to put more money in consumers’ pockets.Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, said the composition of the deal was vastly different from a larger bill that Democrats failed to push through the Senate in the fall. It included several spending programs that were set to expire after a few years, and budget hawks warned that the overall package would add heavily to federal debt if those programs were eventually made permanent, as Washington has been known to do, without offsetting tax increases.Ms. MacGuineas called the original idea, known as Build Back Better, “a massive gimmicky budget buster.” She had kinder words for the new package, saying it “manages to push against inflation, reduce the deficit, and, once fully phased in, it would actually cut net spending, without raising net taxes.”“That is a pretty monumental improvement,” she added.The bill springs from an agreement between Senator Chuck Schumer of New York, the majority leader, and Senator Joe Manchin III of West Virginia, a key centrist Democrat. President Biden blessed it last week, and it carries what remains of what was once his $4 trillion domestic agenda.Understand What Happened to Biden’s Domestic AgendaCard 1 of 7‘Build Back Better.’ More

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    Red Flags for Forced Labor Found in China’s Car Battery Supply Chain

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    The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur workers standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their new employer, the Xinjiang Nonferrous Metal Industry Group, announced.But this was no ordinary worker orientation. It was the kind of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned more than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.The scene also represents a potential problem for the global effort to fight climate change.China produces three-quarters of the world’s lithium ion batteries, and almost all the metals needed to make them are processed there. Much of the material, though, is actually mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with relying on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a way to shore up scarce supplies.That means companies like the Xinjiang Nonferrous Metal Industry Group are assuming a larger role in the supply chain behind the batteries that power electric vehicles and store renewable energy — even as China’s draconian crackdown on minorities in Xinjiang fuels outrage around the world.The Chinese government denies the presence of forced labor in Xinjiang, calling it “the lie of the century.” But it acknowledges running what it describes as a work transfer program that sends Uyghurs and other ethnic minorities from the region’s more rural south to jobs in its more industrialized north.Xinjiang Nonferrous and its subsidiaries have partnered with the Chinese authorities to take in hundreds of such workers in recent years, according to articles displayed proudly in Chinese on the company’s social media account. These workers were eventually sent to work in the conglomerate’s mines, a smelter and factories that produce some of the most highly sought minerals on earth, including lithium, nickel, manganese, beryllium, copper and gold.It is difficult to trace precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the United States, Germany, the United Kingdom, Japan, South Korea and India, according to company statements and customs records. And some have gone to large Chinese battery makers, who in turn, directly or indirectly, supply major American entities, including automakers, energy companies and the U.S. military, according to Chinese news reports.It is unclear whether these relationships are ongoing, and Xinjiang Nonferrous did not respond to requests for comment.But this previously unreported connection between critical minerals and the kind of work transfer programs in Xinjiang that the U.S. government and others have called a form of forced labor could portend trouble for industries that depend on these materials, including the global auto sector.A new law, the Uyghur Forced Labor Prevention Act, goes into effect in the United States on Tuesday and will bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and every raw material they are made with, are free of forced labor — a tricky undertaking given the complexity and opacity of Chinese supply chains.A Critical Year for Electric VehiclesAs the overall auto market stagnates, the popularity of battery-powered cars is soaring worldwide.Charging Stations: The Biden administration unveiled proposed regulations that would require stations built with federal dollars to be located no more than 50 miles apart.General Motors: The company hopes to become a leading force in the electric vehicle industry. Its chief executive shared how G.M. intends to get there.Turning Point: Electric vehicles still account for a small slice of the market, but this year, their march could become unstoppable. Here’s why.New Materials: As automakers seek to electrify their fleets and to direct electricity more efficiently, alternatives to silicon are gaining traction.The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar companies last year were forced to halt billions of dollars of projects as they investigated their supply chains.The global battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.Trade experts have estimated that thousands of global companies may actually have some link to Xinjiang in their supply chains. If the United States fully enforces the new law, it could result in many products being blocked at the border, including those needed for electric vehicles and renewable energy projects.Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it would be disruptive to the U.S. economy and the clean energy transition.Representative Thomas R. Suozzi, a Democrat from New York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too damn bad.”“We can’t continue to do business with people that are violating basic human rights,” he said. To understand how reliant the battery industry is on China, consider the country’s role in producing the materials that are critical to the technology. While many of the metals used in batteries today are mined elsewhere, almost all of the processing required to turn those materials into batteries takes place in China. The country processes 50 to 100 percent of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, according to Benchmark Mineral Intelligence, a research firm.“If you were to look at any electric vehicle battery, there would be some involvement from China,” said Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence.The materials Xinjiang Nonferrous has produced — including a dizzying array of valuable minerals, like zinc, beryllium, cobalt, vanadium, lead, copper, gold, platinum and palladium — have gone into a wide variety of consumer products, including pharmaceuticals, jewelry, building materials and electronics. The company also claims to be one of China’s largest producers of lithium metal, and its second-largest producer of nickel cathode, which can be used to make batteries, stainless steel and other goods.Xinjiang Non-Ferrous Metal Industry Group was one of the region’s earliest miners, operating the state-owned No. 3 pegamite mining pit beginning in the 1950s.Shen Longquan/Visual China Group, via Getty ImagesIn recent years, the company has expanded into Xinjiang’s south, the homeland of most Uyghurs, acquiring valuable new deposits that executives describe as “critical” to China’s resource security.Ma Xingrui, a former aerospace engineer who was appointed Communist Party secretary of Xinjiang in 2021, has talked up Xinjiang’s prospects as a source of high-tech materials. This month, he told executives from Xinjiang Nonferrous and other state-owned companies that they should “step up” in new energy, materials and other strategic sectors.Xinjiang Nonferrous’s role in work transfer programs ramped up several years ago, as part of efforts by the Chinese leader Xi Jinping to drastically transform Uyghur society to become richer, more secular and loyal to the Communist Party. In 2017, the Xinjiang government announced plans to transfer 100,000 people from southern Xinjiang into new jobs over three years. Dozens of state-owned companies, including Xinjiang Nonferrous, were assigned to absorb 10,000 of those laborers in return for subsidies and bonuses.Transferred workers appear to make up only a minor part of the labor force at Xinjiang Nonferrous, perhaps a few hundred of its more than 7,000 employees. The company and its subsidiaries reported recruiting 644 workers from two rural counties of southern Xinjiang from 2017 to 2020, and training more since then.Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.“No one has been forced to become ‘transferred labor’ in Xinjiang,” Wang Wenbin, a spokesman for the Chinese foreign ministry, told reporters in Beijing this month.It is difficult to ascertain the level of coercion any individual worker has faced given the limited access to Xinjiang for journalists and research firms. Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain, said that resisting such programs is seen as a sign of extremist activity and carries a risk of being sent to an internment camp.“A Uyghur person cannot say no to this,” she said. “They are harassed or, in the government’s words, educated,’ until they are forced to go.”Files from police servers in Xinjiang published by the BBC last month described a shoot-to-kill policy for those trying to escape from internment camps, as well as mandatory blindfolds and shackles for “students” being transferred between facilities.Other Chinese metal and mining companies also appear to be linked with labor transfers at a smaller scale, including Zijin Mining Group Co. Ltd., which has acquired cobalt and lithium assets around the globe, and Xinjiang TBEA Group Co. Ltd., which makes aluminum for lithium battery cathodes, according to media reports and academic research. Other entities that were previously sanctioned by the United States over human rights abuses are also involved in the supply chain for graphite, a key battery material that is only refined in China, according to Horizon Advisory, a research firm.An indoctrination center in Hotan, China. In 2017, the regional government announced plans to transfer 100,000 people from the cities of Kashgar and Hotan in southern Xinjiang into new jobs.Gilles Sabrié for The New York TimesThe raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple companies as they are turned into auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the United States. Many more of the company’s materials are likely transformed in Chinese factories into other products before they are sent abroad.For example, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the United States that uses lithium to produce a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.A Livent spokesman said that the firm prohibits forced labor among its vendors, and that its due diligence had not indicated any red flags. Livent did not respond to a question about whether products made with materials from Xinjiang are exported to the United States.In theory, the new U.S. law should block all goods made with any raw materials that are associated with Xinjiang until they are proven to be free of slavery or coercive labor practices. But it remains to be seen if the U.S. government is willing or able to turn away such an array of foreign goods.“China is so central to so many supply chains,” said Evan Smith, the chief executive of the supply chain research company Altana AI. “Forced labor goods are making their way into a really broad swath of our global economy.”Raymond Zhong More

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    Mexico Is Buying a Texas Oil Refinery in a Quest for Energy Independence

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    President López Obrador wants to halt most oil exports and imports of gasoline and other fuels. Critics say he is reneging on Mexico’s climate change commitments.DEER PARK, Texas — Two giant murals, on storage tanks at an oil refinery here, depict the rebels led by Sam Houston who secured Texas’ independence from Mexico in the 1830s. This week those murals will become the property of the Mexican national oil company, which is acquiring full control of the refinery.The refinery purchase is part of President Andres Manuel López Obrador’s own bid for an independence of sorts. In an effort to achieve energy self-sufficiency, the president of Mexico is investing heavily in the state-owned oil company, placing a renewed emphasis on petroleum production and retreating from renewable energy even as some oil giants like BP and Royal Dutch Shell are investing more in that sector.Mr. López Obrador aims to eliminate most Mexican oil exports over the next two years so the country can process more of it domestically. He wants to replace the gasoline and diesel supplies the country currently buys from other refineries in the United States with fuel produced domestically or by the refinery in Deer Park, which would be made from crude oil it imports from Mexico. The shift would be an ambitious leap for Petroleos Mexicanos, the company commonly known as Pemex. The company’s oil production, comparable to Chevron’s in recent years, has been falling for more than a decade, and it shoulders more than $100 billion in debt, the largest of any oil company in the world.The decision to pay $596 million for a controlling interest in the Deer Park refinery, which sits on the Houston ship channel and would be the only major Pemex operation outside Mexico, is central to fulfilling Mr. López Obrador’s plans to rehabilitate the long-ailing oil sector and establishing eight productive refineries for Mexican use. Mexico also agreed to pay off $1.2 billion in debts that Pemex and Shell jointly owe as co-owners of the refinery, which is profitable.“It’s something historic,” Mr. López Obrador said last month. In a separate news conference last year, he said, “The most important thing is that in 2023 we will be self-sufficient in gasoline and diesel and there will be no increase in fuel prices.”While Mr. Lopez Obrador’s policies diverge from the rising global concern over climate change, they reflect a lasting temptation for leaders and lawmakers worldwide: replacing imported energy sources with domestically produced fuels. Further, the generally well-paying jobs the oil and other fossil fuel industries provide are politically popular across Latin America, Africa as well as industrialized countries like the United States.In the 1930s, the Mexican government took over Royal Dutch Shell’s operations south of the border as it nationalized the entire oil industry then dominated by foreigners. Now Mr. López Obrador is poised to go one step further, taking complete control of a big Shell oil refinery.The takeover is all the more pointed because it is happening in an industrial suburb that calls itself “the birthplace of Texas,” where rebels marched to the San Jacinto battlefield to defeat the Mexican Army — the event commemorated on the refinery murals. The battlefield is a five-mile drive from the refinery.It is hard to overestimate the connection between oil and politics in Mexico, where the day petroleum was nationalized, March 18, is a national holiday. Oil provides the Mexican government with a third of its revenues, and Pemex is one of the nation’s biggest employers, with about 120,000 workers. Mr. López Obrador hails from the oil-producing state of Tabasco, and the powerful Pemex labor union is a crucial part of his political base. He ran on a platform of rebuilding the company, and has raised its production budget, cut taxes it pays and reversed efforts by his predecessor to restructure its monopoly over oil production in the country.When he took office three years ago, Mr. López Obrador began undoing changes made in 2013 to the country’s Constitution intended to open the oil and gas industry to private and foreign investment. He is also pushing to reverse electricity reforms that his predecessor, Enrique Peña Nieto, put in place to increase the use of privately funded wind and solar farms and move away from state-run power plants fueled by oil and coal.Energy experts say Mexico is backtracking on a commitment it made a decade ago under President Felipe Calderón, to generate more than a third of its power from clean energy sources by 2024. Mexico now produces just over a quarter of its power from renewables.“They are going to heavier fuels rather than to lighter fuels,” said David Goldwyn, a top State Department energy official in the Obama administration. “Virtually every foreign company — Ford, Walmart, G.E., everybody who operates there — has their own net-zero target now. If they can’t get access to clean energy, Mexico becomes a liability.”Mr. López Obrador’s government has said it will combat climate change by investing in hydroelectric power and reforestation.Many of the Mexican president’s initiatives are being contested by opposition lawmakers and the business community. But Mr. López Obrador can do a lot on his own. He plans to spend $8 billion on a project to build an oil refinery in Tabasco state, and more than $3 billion more to modernize six refineries.President Andres Manuel López Obrador hails from the oil-producing state of Tabasco, and the powerful Pemex labor union is a crucial part of his political base.Gustavo Graf Maldonado/ReutersThe purchase of the Deer Park refinery is crucial to his plans because the Tabasco complex will not be completed until 2023 or 2024 and will not produce enough gasoline, diesel and other fuels to meet all of Mexico’s needs.Long a partner of Pemex, Shell, which operates the Deer Park refinery, is selling its stake in part to satisfy investors concerned about climate change who want the oil giant to invest more in renewable energy and hydrogen.Under Mexican ownership the refinery will continue its practice of using Mexican crude oil, but it will probably sell more of the gasoline and other fuels it produces to Mexico. In the future, some energy experts said, Pemex could also use the Deer Park refinery to process oil from other countries that also produce the kinds of heavy crude that Mexico does.“I think it’s a good deal and makes sense for Pemex,” said Tom Kloza, global head of energy analysis at Oil Price Information Service, who noted that Deer Park could perhaps process Venezuelan oil if the United States lifted sanctions against that country.The Mexican policy changes would have only a modest and temporary impact on American refineries, which can replace Mexican oil with crude from Colombia, Brazil, Saudi Arabia and Canada. Refiners could lose as much as a half-million barrels of transportation fuel sales a day to Mexico, but energy experts say refiners would be able to find other markets.Guy Hackwell, the general manager of the Deer Park complex, said, “Best practices will remain in place.” He said the “vast majority of the work force will report to the same job the day after the deal closes.”As for the murals, a Pemex spokeswoman, Jimena Alvarado, said, “We would never remove a historical mural.”Residents in Deer Park, in the heart of the Gulf of Mexico petrochemical complex, say they feel assured that locals will run the plant and Shell will continue to own an adjoining chemical plant. “The phone numbers will remain the same for who we contact in the event of an emergency and we will still have the same people and relationships, so I feel good about that,” Deer Park’s city manager, Jay Stokes, said.But some energy experts said Mr. López Obrador’s approach to energy, including the refinery purchase, would waste precious government resources that could be better used to reduce greenhouse gas emissions and local air pollution. There are also doubts that Mexico can build enough refining capacity to fulfill the president’s objectives.Shell, which operates the Deer Park refinery, is selling its stake in part to satisfy investors concerned about climate change who want the oil giant to invest more in renewable energy and hydrogen.Brandon Thibodeaux for The New York TimesJorge Piñon, a former president of Amoco Oil de Mexico, said Mexico most likely would not be able to immediately profit from slashing exports of crude and processing its own fuels since the refinery business typically has low profit margins, especially in Latin America.He said the Mexican refineries could not match American refineries in handling Mexico’s high-sulfur heavy crude. Mexican fuels made from heavy oil caused severe air pollution problems in many cities before the country began importing cleaner-burning American gasoline and diesel over the last 20 years.By exporting less oil, Mexico would also almost certainly use more of it for domestic power generation, potentially pushing out solar and wind generation and producing more air pollution and greenhouse gas emissions.“His nationalistic decisions will have a negative impact on climate change,” Mr. Piñon said. “He is marching back to the 1930s.”Mr. López Obrador is unapologetic. “Oil is the best business in the world,” he said at a news conference last May. More

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    Battling for Bolivia’s Lithium That's Vital to Electric Cars

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    SALAR DE UYUNI, Bolivia — The mission was quixotic for a small Texas energy start-up: Beat out Chinese and Russian industrial giants in unlocking mineral riches that could one day power tens of millions of electric vehicles.A team traveled from Austin to Bolivia in late August to meet with local and national leaders at a government lithium complex and convince them that the company, EnergyX, had a technology that would fulfill Bolivia’s potential to be a global green-energy power. On arriving, they found that the conference they had planned to attend was canceled and that security guards blocked the location.Still, the real attraction was in plain sight: a giant chalky sea of brine high in the Andes called the Salar de Uyuni, which is rich in lithium, among several minerals with growing value worldwide because they are needed in batteries used in electric cars and on the power grid.Surrounded by rusty equipment, empty production ponds and pumps uncoupled from pipes, it seemed a forlorn spot. But to Teague Egan, EnergyX’s chief executive, it had nothing but promise.“This is the new Saudi Arabia,” he promised.The Indigenous Quechua people revere the Salar de Uyuni, 4,000 square miles of salt flats that their forebears believed were the mixture of a goddess’s breast milk and the salty tears of her baby. For Mr. Egan, the site is “pure white beauty as far as the eye can see.”With a quarter of the world’s known lithium, this nation of 12 million people potentially finds itself among the newly anointed winners in the global hunt for the raw materials needed to move the world away from oil, natural gas and coal in the fight against climate change.Eight foreign companies have been competing in recent months to establish pilot lithium projects here, including four from China and one from Russia, countries that have had friendlier relations with Bolivia’s government than the United States has.Just as wildcatters have long sought riches prospecting for oil, the clean energy revolution is spawning a wave of gritty entrepreneurs who hope to ride a new boom, vaulting themselves into the intersection of geopolitics and climate change. Some are familiar names like Elon Musk at Tesla, while Mr. Egan and others are strivers looking for their first break in mineral-rich places like Bolivia, the Democratic Republic of Congo and the South Pacific.Mr. Egan is among the determined underdogs. His company, with 30 employees, is one of two from the United States among the eight contenders to develop Bolivia’s lithium reserves.Lithium is a basic component of lithium-ion batteries, enabling the flow of electrical currents. Because of the metal’s light weight, long life, large storage capacity and easy recharging, demand is expected to grow exponentially over the next decade to power an expanding fleet of vehicles produced by Tesla, Ford Motor, General Motors and other carmakers and spread power grid battery storage for renewable energy. This year alone, prices for lithium compounds are up over 200 percent on several global markets.Mr. Egan, 33, had never worked in the energy industry before starting EnergyX in 2018 to pursue lithium projects. With his hair slicked back, frequently unshaven and wearing his baseball cap backward, he projects youthful exuberance and self-confidence.He established a book club at his company and assigned a biography of Thomas Edison as the first offering to send a message to his colleagues: “You can try 100 times and give up. Edison tried 17,000 plants to produce domestic rubber.”Despite the bravado, he would appear to be an unlikely character to drive Bolivia’s energy future. He has never worked in Latin America and speaks virtually no Spanish.But for Mr. Egan, the only thing that is really important is his belief that his technology to coax the lithium out of the Andean brine is the best to finally make Bolivia an energy power.“In Bolivia they are so sensitive about the politics,” he said. “I just don’t understand why they should not do what is in the best interest of the country. I can only control what I can control.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}‘The Lithium Is for Bolivians’There is much that Mr. Egan cannot control in this country long riddled with coups and racial, ideological and regional divisions.Bolivia’s governing party, the Movement for Socialism, is led by former President Evo Morales, who tried to draw the country closer to China before protests and the military forced him from power two years ago.The current president, Luis Arce, who was Mr. Morales’s economy minister, heads a coalition of social democrats and more doctrinaire leftists. He faces challenges from local movements that object to the socialist government and are wary of foreign interests, seeing them as exploiters of Bolivia’s mineral wealth going back to the 17th century.Only two years ago, a lithium deal between Mr. Morales and a German company led to protests that eventually spread around the country. Mr. Morales was forced to scrap a contract only a week before he fled the country.Marco Pumari, a local politician who led the protests, demanded a tripling of royalties for Potosí Province and local involvement in ownership of lithium enterprises. He said that his demands had not changed, and that his opposition to the ruling socialists remained steadfast.“As soon as they publicly choose the foreign companies, the province will mobilize,” he said in an interview. “The government is playing with fire.”In August, about 80 protesters took over two roads, blocking Mr. Arce from visiting government lithium facilities and demanding that he fire the new head of the state-owned lithium company and give local residents greater say in decisions about lithium production. The protest forced the cancellation of the conference that Mr. Egan and his EnergyX team were scheduled to attend.“We need asphalt roads and textile factories,” said Rosa Belen Julaca, a Potosí quinoa farmer who joined the protest even though she generally supports the government. “If they don’t listen to us, we’ll keep blocking the roads.”Government officials soon visited to calm tensions.Women poured colorful confetti on the heads of officials and draped their necks in wreaths of flowers. The visitors included Franklin Molina, the energy minister, and the head of the state lithium company, whom the protesters had wanted ousted.At a festive community meeting punctuated by Indigenous music, dance and poetry, they promised jobs and social programs from a lithium industry that would someday include manufacturing batteries and even electric cars.“The lithium is for Bolivians,” Mr. Molina declared to cheers.Energy experts say a major increase in Bolivian lithium production would keep battery prices down, helping President Biden achieve his goal of electrifying half of new cars sold in the United States in 2030, up from 4 percent today.“The amount of lithium we need in any of our climate goals is incredible,” said Anna Shpitsberg, the U.S. deputy assistant secretary of state for energy transformation. “Everyone is trying to build up their supply chains and think about how to be strategic.”But Washington has little sway in Bolivia, whose leaders have long disagreed with the American approach to drug policy and Venezuela. That may explain why some energy executives do not think Bolivia is worth the risk.“You’ve had 30 years’ worth of projects in Bolivia with almost nothing to show,” said Robert Mintak, chief executive of Standard Lithium, a publicly traded mining company based in Vancouver, British Columbia, referring to lithium development efforts dating back to 1990. “You have a landlocked country with no infrastructure, no work force, political risk, no intellectual property protection. So as a developer, I would choose someplace else that is safer.”Mr. Egan sees the odds differently.‘I Need to Be Involved’That Mr. Egan has gotten this far is a marvel. He learned about Bolivian lithium only by chance when he and a friend crisscrossed South America as tourists in 2018.When they got to the salt flats, a guide explained that they were standing on the world’s largest lithium reserve. “I thought, ‘I don’t know how I’m going to do this, but I need to be involved,’” Mr. Egan said.He had tried his hand as a sports and music agent and ran a small investment fund at the time. He had invested in Tesla in 2013 at $9 a share; it now trades around $975. (He would not reveal how many shares he had bought and how many he still had.)But he felt that he wasn’t achieving much. Before Mr. Egan traveled to South America, his father, Michael, the founder of Alamo Rent A Car, advised him to make two lists — of his five biggest passions and of the five industries he thought would grow fastest in the coming decades. Renewable energy was on both lists.Mr. Egan read up on lithium. He settled on filtering membranes as the vital missing link to make lithium evaporation ponds more productive and profitable. Then he came across a 2018 paper written by Benny Freeman, a chemical engineering professor at the University of Texas at Austin, and some scientists working in Australia about a new type of membrane with atom-size pores that could be used to separate and purify lithium salts from rocks and brines.He traveled to Austin and Australia, and Mr. Egan and Dr. Freeman hit it off.Teague Egan at the Salar de Uyuni, which he called “the new Saudi Arabia.”The two made an unlikely pair. Dr. Freeman, 60, was born into poverty in rural North Carolina and was the first person in his family to graduate from high school. Mr. Egan grew up wealthy in southern Florida. Dr. Freeman became passionate about chemistry handling pesticides on his family’s apple farm. Mr. Egan said he had learned business skills from his father at the dinner table.Mr. Egan returned again and again to Bolivia, but he made little progress selling officials on his technology. “All these people, their hands are just tied behind their backs,” he said, since they are scared to offend leaders at the top.A big break came in April 2020 when Diego von Vacano, a Bolivian political science professor at Texas A&M University — and an informal adviser to Mr. Arce, then a leading presidential candidate — contacted Dr. Freeman for advice on lithium extraction. Dr. Freeman connected Dr. von Vacano and Mr. Egan, and the Texas A&M professor became Mr. Egan’s vital bridge to Bolivia.After Mr. Arce won, Mr. Egan attended the inauguration. With Dr. von Vacano’s help, Mr. Egan made critical connections in the new administration.He was not able, though, to secure a meeting with the new president. During one trip, he tracked down Mr. Arce when they were both in Santa Cruz. Accompanied by Dr. von Vacano, Mr. Egan finally got a glimpse of the president eating in the canvas-covered wooden stalls of a fish market.But as he approached the leader, Dr. von Vacano stopped him. Mr. Arce was eating with a congressman antagonistic toward the United States. Avoiding a scene, Mr. Egan walked away. He returned home, but he was not done trying.A Visit and a BlessingMr. Egan discussing strategy with his team after learning that the conference they flew to Bolivia to attend had been canceled.In August, after the conference was canceled, Mr. Egan and his team flew to La Paz, the seat of government, and kept knocking on doors, hoping to capitalize on the contacts that Mr. Egan had made among top Energy Ministry officials.As always, there were hurdles.When they met with Carlos Humberto Ramos, the newly appointed head of the state lithium company, to persuade him of the advantages of their approach, they found that he had little understanding of EnergyX’s membrane technology.Mr. Egan’s team returned to Mr. Ramos the next day, and after explaining its technology to his top technicians, the team was told that it could visit the lithium complex and that an initial agreement approving EnergyX’s project was virtually a done deal.That night, EnergyX’s strongest ally in the government — Álvaro Arnez, a deputy energy minister overseeing lithium development — gave the arrangement his blessing. He joined Mr. Egan’s team for a celebration at an elegant La Paz restaurant over plates of dried Amazonian catfish and roast pork with pear kimchi.The next morning, Mr. Egan and his team flew back to the salt flats.They inspected several shimmering man-made ponds, which hold brine for evaporation — a method of lithium extraction that has been hampered by heavy seasonal rains.Even when dry, the lithium must be separated chemically from other minerals, a process that wastes much of the desired lithium.Mr. Egan told technicians that his technology could greatly increase and speed up production.There were disagreements over where to put the proposed pilot project, and when Mr. Egan suggested ways to move forward toward commercialization, the technicians told him to wait until initial test results were in. But he was content that he toured the facilities before other companies.In an interview, Mr. Molina, the energy minister, said Chinese and Russian diplomats were lobbying on behalf of their own companies, but he insisted that “there is room for Americans, Russians, Chinese, Japanese, whoever wants to invest as long as they respect our sovereignty.”China has advantages. It already controls substantial lithium assets in South America, and its businesses have made roughly $4.5 billion in lithium investments over the last three years in South America and Mexico. Chinese banks give low-interest loans to Chinese mining and construction companies operating abroad to advance President Xi Jinping’s plans to dominate industries of the future.As for Russia, President Vladimir V. Putin has spoken by phone with Mr. Arce at least twice about lithium and other matters, Russian officials said.Mr. Egan said he was getting virtually no help from the U.S. government. And American officials say their best hope is to gently press for a level playing field.The long game has paid off for Mr. Egan, at least so far. He signed an agreement to start the pilot, and in October he shipped a container to Bolivia outfitted with pumps, valves, tanks and membranes to separate lithium from brine. If the pilot shows promising results, he may be able to proceed with a commercial project.Of the 20 companies in competition at the start of the year, the government has named eight to carry out pilots, including one other small American company, Lilac Solutions of California.All the contenders — the eighth is from Argentina — will be competing for Bolivian government attention and resources like power hookups and skilled local technicians in the months ahead before any can be approved to move toward commercial operations.“We still need to do a demonstration and scale it up,” Mr. Egan acknowledged. “We still need to go commercial. I mean, this is just Day 1.” More